Venture capitalists and other investors routinely gamble on which start-up companies warrant their investment. Complex models and detailed algorithms can be used to evaluate an organizations financial position, market potential, and level of quantifiable risk. However, when it comes to assessing the effect of the founders and the senior management team on a ventures likelihood of success, investors are forced to rely on little more than their experience, intuition, and general industry rules of thumb.

Leadership research, which can help investors predict the effect of top management on company performance, has traditionally focused on the role of the individual leader. But anybody who has spent time in organizations knows that success is really driven by the team, said Charles OReilly, the Frank E. Buck Professor of Management at the Stanford Graduate School of Business. No one had compared the impact of the founding and top management teams, added the studys co-author Christine Beckman, Stanford PhD 99, now Associate Professor of Organization and Management at the Paul Merage School of Business, University of California, Irvine. Other gaps in the existing research literature include the effect of team composition (prior company affiliations and functional diversity) and management turnover on a companys success.

To address these open issues and potentially provide investors with more definitive information to assess a startups management team, OReilly and Beckman, along with Diane Burton, Stanford PhD 96, now a faculty member at the Sloan School of Management, Massachusetts Institute of Technology, studied how the composition and turnover of founding and senior management teams impact company success. The results confirmed that founding and senior management teams with a variety of prior company affiliations and broad functional diversity tend to be more successful more quickly.

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The Millstein Center for Corporate Governance and Performance at the Yale School of Management today marks the one-year anniversary of its launch. As it embarks on its second year of promoting good governance, the Center is pleased to announce its upcoming schedule of events, research agenda, and new members of its staff and advisory board.

The Millstein Center, which is named in honor of Ira M. Millstein, a principal architect of modern international corporate governance, was established with the mission to serve as a leading global resource for testing, challenging, and advancing the premise that corporations should and can serve society. It pursues this mission through a unique interdisciplinary approach, convening the top academics from fields such as economics, law, and politics, experienced practitioners, and leaders in business, investment, and public policy.

We have fulfilled our vision to create a center that breaks down the traditional boundaries of corporate governance to address the most important issues in a practical and effective way, said Ira Millstein, senior associate dean for corporate governance at Yale SOM. The collaborations with our partners have yielded new insight into the issues that are being discussed in boardrooms and news headlines such as investor activism and executive compensation policy. In the coming year, we look forward to furthering the Centers mission through an even more ambitious research agenda.

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